Creating a performance culture
Rohantha ATHUKORALA
GROWTH: For an organisation to be lean is the buzzword in today's
business world. The strategic reason being, when an organisation is lean
it can drive productivity up resulting a stronger bottom line that can
drive up shareholder value significantly.
Citi Bank is a classic example where in 2002 the global sales revenue
dropped by six percent to 94.7 billion dollars but the profit growth was
a staggering 16.7 percent and brand equity growing by eight percent to
19.9 billion dollars (Source: Inter Brand survey 2002).
However, during the process of an organisation becoming lean it does
not mean that one must practice mean tactics.
Specially in a country like Sri Lanka where emotional attachment is a
stronger reason to work than the masculine reasons like achievement,
challenge and victory that exists in the west.
When we analyse successful organisations like Dialog or Unilever in
Sri Lanka we see that for a 'lean' organisation to exist there has to be
lean processes, a proven technique even when applied by government.
A typical 'lean process' can help create a performance based culture
within an organisation due to the clear responsibilities and
accountability that one carries in a modern organisation.
The best case in point is Royal Mail in the U.K where the processes
are so sharply formulated that a letter mailed from Scotland that needs
to be delivered in London within 3 days has a specific coloured letter
box which drives a chain of people in collecting, sorting and the
delivery of that letter in the stipulated time.
Hence we see that a 'Lean process formulated to consumer
requirements' delivers value to the consumer.
This constitutes a system that requires that all processes are
reconsidered and carefully integrated to obviating of customer service.
If we take Federal Express who is a leader in the courier business
has 247 planes that land from around the world in Mississippi airport
between midnight and 3 am and then with a semi automated sorting out
process a parcel is delivered the next day to a door-step of an office.
For Governments this can mean a sea change in attitude with the
citizens being regarded as the customer of government, however when
applied it really works.
In Sri Lanka, we see the Passport office coming up to this standard
based on the need for same day passport or a passport within 3 days.
However, it is good leadership together with a strong rewards
strategy that a performance culture can be developed and sustained.
Customer centricity
The ongoing success of corporations such as Toyota, the corporation
that introduced and developed 'Lean Manufacturing' has been based on
defining processes on the basis of their ability to deliver customer
value and excising those that do not.
As a by product, of sometimes ruthlessly, pruning those processes
will deliver customer value to companies and be able to reduce costs
more substantially than through cost cutting exercises that many
companies embark.
If we take a leading hotel like Cinnamon Grand in Sri Lanka, customer
satisfaction at every stage of every transaction is drilled with a
focused training programme called Cinnamon Magic.
This has enhanced employee satisfaction and commitment too, whist
making a customer experience unique. In short, "lean Processes" have
delivered a business culture which results in the ultimate win/win
situation.
Culture change
Organisational culture has frequently been simplified and expressed
as "the way we do things here". It is more than that. It is perhaps
above all else, an expression of the values that drive all activities
within an organisation and the norms or rules that ensure that those
values are implemented in practice. At a retail store like Wal-Mart,
values of the company receive more than lip service from the senior
management and employees alike.
During the times of their founder CEO was alive; he was at the shop
floors talking to the customers to understand how better this No 1
retail store in the world can delight a customer. Let me site an
example.
He found out that most housewives equate 'Fresh Fish' when having to
purchase a whole fish taken out of an ice bath and not when it is packed
in trays.
So today, Wal-Mart has fish in baths of ice, in line with customer
perceptions of what fresh means. Hence we see culture driving behaviour
and it lies at the heart of performance.
Re-addressing processes provides a unique opportunity to emphasize
the values and norms that lie behind them to ensure that they are shared
across the organisation in a company or a department in a government.
The good news is that the work becomes enriched through customer
centric processes leading to the performance culture becoming deep
-rooted.
Involvement
W. Edward Demming said, "What cannot be measured cannot be managed".
In order to ensure that lean processes deliver as expected.
Measurement is required strategic objectives need to be broken down
to tactical measures of performance that all involved must understand,
accept and achieve.
In Sri Lanka Pizza Hut is a typical organisation that monitors
performance. If a Pizza is not delivered to a table within 15 minutes
after placing the order, the Pizza is free to the customer.
However, we must note that when targets are imposed people find ways
of satisfying them on 'paper' that often have an adverse effect on
performance.
If people are to take responsibility for performance at every level
they need an opportunity, together with management to set their own
targets based on the strategic demands of the organisation.
Research has revealed time and time again that when people are given
the opportunity of setting their own objectives the role of management
becomes more a task of injecting 'reality' than having to encourage them
to achieve more. Involvement increases commitment, efficiency and
morale.
Experiences in both companies and government departments have shown
that everyone helps solve problems. If performance falls, when there has
been a cohesive team that has build the targets in a culture with lean
processes the turnaround is faster and stronger. The case in point is
the British government which has achieved an increase of productivity of
60 per cent.
Nobody should assume that identifying and developing a true
performance culture is necessarily easy. There may be significant
existing cultural barriers to be overcome.
Especially in government departments in particular the view that "the
way we have always done things must be right" can be entrenched. The
good news is, that experience has shown that once people in an
organization begins to enjoy the benefits of "working lean" new
attitudes become grained and unshakable in an amazingly short time.
It is not only in the public sector but in which resistance to any
thing different can be seen but also in the private sector.
Even in the public sector - my experience as the Chairman of an apex
Export institution was, if the leadership is seen credible and
financially discipline change can happen with least resistance. If this
is achieved in the private sector it will lead to stronger profits
whilst in the government sector it will be a higher productivity and
stronger economic growth.
Effective leadership is a prerequisite for success. Unless the top
management is prepared to lead by example, addressing where necessary
existing leadership problems, there is limited hope that even the most
committed employees can achieve.
Li Kuan Yu was the best example of where a visionary leader led a
country to achieve heights by addressing the key issues of corporate
Singapore.
We in Sri Lanka have many examples in the small and medium
enterprises who have demonstrated leadership which has transformed a
company to build a culture that drives people to higher performance -
Siddalepa, Kandygs Handlooms, Odel, House of Fashion to mention a few.
Lean demands that leaders have the courage to identify and resolve
deep-seated organizational problems. It is not a quick fix. It is a
strategic and tactical tool that must be applied consistently throughout
the organisation.
Politicians, business leaders, senior public servants, academics and
consultants all have a role in clarifying the benefits of lean
processes. The public both in the role of customers and employees need
to be convinced that the approach offers them advantages now and in the
future. All stakeholders need to understand that early benefits are not
the end of the story.
Pepsi Cola is classic example where the turnover growth in 2002 was
only 7.6% to 26.9 Billion dollars but the profit growth was a staggering
70% whilst the Brand Equity growth was up 4% to 12 Billion dollars the
same year.
Toyota is another example where initial developers of lean
manufacturing took years to reach the crescendo position that they have
achieved today. They have now pushed companies like Ford and General
Motors to achieve dominance over time.
Turnover of Toyota exceeds 153 Billion dollars whilst the brand
equity growth has gone up to 20 Billion dollars at nine percent growth.
This performance has become the benchmark in the industry today,
including customer satisfaction levels.
Organisations have enjoyed the accruals of the benefits along the
way, but it is a long journey. Every journey begins with a single step.
With lower costs, higher quality and greater public satisfaction
should we not take the first step today? |